10-QPeriod: Q3 FY2011

ALLSTATE CORP Quarterly Report for Q3 Ended Sep 30, 2011

Filed October 31, 2011For Securities:ALLALL-PJALL-PBALL-PHALL-PI

Summary

The Allstate Corporation reported a net income of $165 million for the third quarter of 2011, a decrease from $367 million in the same period of 2010. This decline was largely driven by a significant increase in catastrophe losses, particularly impacting the Property-Liability segment, which reported an underwriting loss of $311 million compared to an underwriting income of $266 million in the prior year's quarter. The Allstate Financial segment, however, showed strong performance with net income of $183 million, more than double the $85 million reported in Q3 2010, driven by net realized capital gains and improved operational results. For the first nine months of 2011, consolidated net income fell to $64 million from $632 million in the prior year. The Property-Liability segment incurred a net loss of $230 million for the period, a sharp contrast to the $794 million net income in the first nine months of 2010, primarily due to higher catastrophe losses and unfavorable reserve reestimates. The Allstate Financial segment contributed significantly with $446 million in net income, demonstrating resilience and growth. The company also completed a $1.01 billion acquisition of Esurance and Answer Financial in early October 2011, which is expected to expand its reach in the direct-to-consumer market.

Financial Highlights

35 data points
Beta

Revenue

$8.24B

Net Income

$175.00M

2.1% Net Margin

EPS (Diluted)

$0.34

Total Assets

$126.96B

Cash & Equivalents

$1.03B

Free Cash Flow

$357.00M

Financial Statements
Beta
Revenue$8.24B
Interest Expense$92.00M
Net Income$175.00M
EPS (Basic)$0.34
EPS (Diluted)$0.34
Shares Outstanding (Basic)512.00M
Shares Outstanding (Diluted)514.20M

Key Highlights

  • 1Consolidated net income for Q3 2011 was $165 million, down from $367 million in Q3 2010.
  • 2Property-Liability segment reported a Q3 2011 underwriting loss of $311 million, a significant decrease from an underwriting income of $266 million in Q3 2010, largely due to higher catastrophe losses.
  • 3Allstate Financial segment's net income rose to $183 million in Q3 2011 from $85 million in Q3 2010.
  • 4Premiums earned in Property-Liability decreased by 1.0% to $6.43 billion in Q3 2011.
  • 5Net realized capital gains were $264 million in Q3 2011, a turnaround from net realized capital losses of $144 million in Q3 2010.
  • 6Shareholders' equity decreased slightly to $18.10 billion as of September 30, 2011, from $19.02 billion as of December 31, 2010.
  • 7The company completed the acquisition of Esurance and Answer Financial for $1.01 billion in early October 2011.

Frequently Asked Questions

The primary driver for the decrease in net income was a significant increase in catastrophe losses, particularly impacting the Property-Liability segment, which resulted in an underwriting loss for the quarter. The combined ratio for Property-Liability deteriorated to 104.8% from 95.9% in the prior year's quarter.

The Allstate Financial segment demonstrated strong performance, with net income increasing to $183 million in the third quarter of 2011 from $85 million in the same period of 2010. This improvement was driven by higher net realized capital gains and increased premiums and contract charges, along with lower operating costs and expenses.

The Allstate Corporation completed its $1.00 billion share repurchase program in September 2011, which commenced in November 2010. During the first nine months of 2011, they repurchased 29.0 million common shares for $840 million.

The acquisition of Esurance and Answer Financial for $1.01 billion in early October 2011 was a significant event. While the initial accounting was incomplete at the time of this filing, it is expected to expand the company's reach in the self-directed, brand-sensitive market segment and strengthen its offerings to consumers seeking choices among insurance carriers.